The 4 Things That May Be Preventing You From Meeting Production Demand
Mitigating risk in manufacturing is a tall task for many companies — especially these days. Everything from supply chain, workforce retention and inflation can hinder a company’s profitability without warning.
How can a well led company mitigate these risks without disrupting the flow of production?
Join us as we discuss:
- Making continuous manufacturing improvements to mitigate risks
- Creating efficiency in common areas to combat inflation
- Reasons why lean implementations fail
- Best practices for efficient product flow
- Leaders creating a positive and engaging workplace
Check out Dan’s blog on 10 Reasons Lean Transformations Fail
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Check out the full episode below:
Dan: I would say that the first recommendation I would make for manufacturers is to take a step back and take a larger look at their supply chain and assess the risk. Part of assessing the risk is you want to look at all the different variables that affect the reliability or the risk that you have inherently to associate with some of your suppliers or your supply chain.
Josh: Today we’re talking about identifying constraints, embracing constraints, and continuously improving.
What you’ll learn in our chat today is that not all implementations of continuous improvement methodologies succeed. We’ll explore why that is, what’s needed to succeed, and how this approach empowers leaders to actually continuously improve. Our next guest has nearly 20 years of experience helping manufacturers in various industries including aerospace, injection molding, chemicals, consumer goods, oil and gas, medical devices, and more.
Throughout his career, his passion for manufacturing excellence, effective leadership, and good old common sense has enabled manufacturers of all kinds to make impressive improvements to their operations. Improvements like 60% decrease in turnover, 21% increase in productivity, 50% reduction in rework, and in another example, a 42% increase to on-time delivery. Currently serving as the president and CEO of Alphanova Consulting, which is the management consulting firm that he founded that helps manufacturers achieve and sustain operational cost reductions. Please welcome to the show, Dan Burgos. Dan, thanks so much for being here today.
Dan: Thank you, Josh. Thank you for having me. It’s a pleasure.
Josh: We start out each conversation with the same question. Dan, no exception to you, I want to hear from you. What’s your day-to-day look like in your role?
Dan: Day-to-day for me, it varies, to be honest with you. There’s not one set way. It fluctuates between client meetings, following up with consultants that we have deployed to different clients. Some business development thrown in there and topped off with some marketing activities to keep the business cycle moving.
Josh: Sounds like you’re a man of many different activities wearing a lot of different hats throughout the day.
Dan: Absolutely. From day to day, week to week, it varies. There’s not one day just like the other one.
Josh: I know that’s something that I can relate to and our listeners as well. Well, look, we’re talking about your experience in manufacturing and what you see that’s pretty prevalent especially current day. Look, COVID-19, that’s been a thing and we’re still feeling the impact. It really exacerbated some problems that were already being experienced by manufacturers. When I talk to manufacturers about what’s keeping them up at night, I hear three distinct themes. None of these are going to come as a surprise.
In fact, we’ve talked about these, you and I in our pre-show. Workforce retention, supply chain struggles, and inflation. Now, these factors are now constraints within operations. In manufacturing, we work with our constraints. We work with them through changing and adaptations. Let’s unpack these factors and a few additional concepts together. I would love for you, Dan, to talk to us about what’s actually happening, and what do we mean when we say workforce retention, supply chain struggles, and inflation? What’s your experience with your colleagues and your partners have been?
Dan: Yes, absolutely. We’ve all been affected ever since COVID-19 started to spread itself into our country or society. Very quickly when the shutdowns happened in 2020, that was just completely disruptive. It’s just been lingering throughout the last 24 months. When we think about supply chain constraints, a lot of these things made the news, the national news. Some of these ports being congested, backed up, suppliers not being able to deliver, lead times being extended longer and longer.
As the name implies, a supply chain, it’s a chain where all these codependent parties affect one another and creating this domino effect. That’s what we’re seeing today. If you will, stay with me for a second. It feels like this triangle of things that are interconnected. Inflation, of course, is driving higher prices. Higher prices are driving individuals to have higher expenses. They’re looking for larger salaries or larger compensation. Now they’re moving to the other companies.
Now, that’s creating turnover and affecting companies being able to deliver which closes the cycle for them to be able to deliver, and not having enough people moving around, it just creates this disruption in supply chain. That’s my humble opinion of what I’m seeing. It’s this cycle. It’s still pervasive after 24 months since the pandemic started.
Josh: I think that’s very well put. The idea of a domino effect is absolutely true especially when you consider all of the activities, tasks, people that have to come together within the supply chain. With COVID-19 popping up and really shutting down work, for one, because you couldn’t go to work, you couldn’t perform those activities. Now you’re starting to get that backlog. Then it was restricted of who could go to work. Of course, we are people, we were suffering from COVID-19.
The sickness, the spreading, having to isolate, constant interruptions due to that meant that people weren’t able to perform these activities, meant that it was more difficult to get these products that we know and we love. The supply shrink. The demand went up. The cost to the consumer went up. With the cost going up, the people are like, “Well, I need to make more money in order to continue to have–
Dan: A home.
Josh: Yes, continue to live the life that I was living. Like you said, that leads to some of these retention problems. Although workforce retention, there’s a lot of complications there, but that is a consistent motivator is, “Can I afford to maintain my lifestyle with what I have?” With the inflation that’s happening because of all these things, the answer for a lot of people has been no.
That’s been something that they’ve sought to change. Those are tough situations that the industry is facing, and I can’t imagine we can expect a single company or manufacturer to successfully address all of them. I would love if you could talk with us about how continuous improvement can help manufacturers overcome these issues.
Dan: Let’s start with the supply chain issues. I would say that the first recommendation I would make for manufacturers is to take a step back and take a larger look at their supply chain and assess the risk. Part of assessing the risk is you want to look at all the different variables that affect the reliability or the risk that you have inherently to associate with some of your suppliers or your supply chain.
Thinking of things like performance for different suppliers, dependability on your business without a supplier, meaning if you cut down on your business to that supplier, they’re going to be affected significantly, or if they have dependency on someone else that it’s not in an industry that’s thriving. Now you’re being affected by that. It could also be reliability, geographical location. There’s all these variables that we typically take and evaluate the supply chain as a whole, and we find where there are areas for risk and start putting things in place.
Things like a dual source. Getting away from single source and just facilitating the flow of goods. Basically, you take the feedback from that risk assessment and start making adjustments so you minimize the risk. It could also be inventory strategies for storage between suppliers and purchasers. That’s supply chain. If we move to inflation, inflation, it’s a tougher one because it’s more of a macro variable that affects just about everyone.
I would say one of the things that continuous improvement, or as you eluded, implementing these practices or strategies is to how do you cut into inflation? The answer is by being more efficient. If your labor costs are going up or any item in your direct cost going up, you can have a significant effect if you start cutting down on labor. I’m not saying cutting down on labor by dismissing or reducing the size of your workforce, but more like becoming more efficient. If let’s say you’re able to cut down on labor, on specific products, then you’re able to maintain your workforce and absorb some growth, which is additional revenue, and the labor cost stay the same. That eats into your inflation costs.
Then lastly, on your workplace disruption or workforce disruption, I would say there’s a number of factors there. It could be compensation as we alluded with inflation. There’s also other aspects of it that go a layer deeper. It could be just the work environment. Nowadays, people are stressed. People are, in some cases, unstable emotionally. When you have a hostile environment where the culture’s not engaging, people get upset or deflated when they have to deal with the same problems over and over.
I see it very often. The workforce keeps bringing problems to their middle management only to be told, “Yes, we’ve got it. We’re looking at it. We’ll address it.” Time, and time, and time, sometimes years go by and nothing happens. People that have the desire to help, to contribute, to do well, to not be frustrated, they end up leaving. There’s an aspect of compensation. There’s an aspect of frustration with a work environment. Then the last one I’ll say is, the aspect of leadership.
It’s a cliche that’s out there that people don’t leave their organizations, they leave their leaders. Well, I encourage some of these manufacturers, respectfully, you encourage them to take a look and evaluate their leaders and say, “Are we contributing in a negative way to a high turnover or a low retention rate from our workforce?” Start working on those.
Josh: A lot to break down there. I think those were all really really great points. To really do our audience justice and the wisdom justice, I think we should dig into a few of those pieces together. Let’s go back to the topic of supply chain. The first thing that you started talking about how continuous improvement could help was first assessing risks by identifying the variables.
I think that that’s such a critical lesson that even I overlook is, what are all the variables that are coming together and leading to this specific result? Which variable do I have to impact in order to affect that particular result? Now, you mentioned a couple of variabilities, specific examples of variables within supply chain, like the performance of the suppliers, their dependability. I was fortunate enough to talk with Deloitte about the idea of reassuring or localizing parts of their supply chain. Do you move to a more reliable location? What does that mean? What does that impact that it has on your operation?
There’s not just identifying the variables, but there’s pretty significant investments that sometimes have to be made in order to really not only identify those variables but do something about them. From your perspective, Dan, when you’re thinking about these variables in the supply chain, aside from the performance of suppliers and their dependability, are there other variables that need to be considered that don’t often get the prioritization or the attention that they need?
Dan: Yes, you alluded to some of the other variables or geographic location. Reassuring it’s a good opportunity, of course. Every business or leadership team needs to evaluate the trade-offs of that because more than likely, reassuring might be more expensive than buying from a developing country. At the same time, if the supplier located in that developing country is not reliable, and instead of a commodity item, they’re supplying a key component to your product, they may bring you down to your knees. It’s something to consider for sure.
Another one I mentioned earlier was also dependency on your business. If you yourself as a manufacturer make up the bulk of business for that supplier, that’s risk. You may want to consider finding a second source. To some degree, it’s a positive that you can control it, but let’s say it’s the opposite as well. If your business is minute or marginal portion of their business, now you’re probably going to be very low on the pecking order for that supplier.
You have to recognize that and react to it, and take action and say, “Okay, we’re a small fish playing in a big pond over here. We probably can’t put our bets all in that one basket, so we need to mitigate risk by finding other sources. You mentioned performance, of course. If someone’s declining performance, work with a supplier. Hopefully, they’re open to your input and they’re open to different packaging, different delivery arrangements, maybe some cross-dock shipping, or cross-docking. It’s a matter of looking at all those variables. I’m trying to think if I can think of another one. It’s not coming to mind. We probably look at six or seven of those that we look at, and based on that, we are able to mitigate that risk.
Josh: I love digging into that idea of variables. Like you mentioned, geographical location is something to consider that is a variable. In some cases, there’s nothing you can do about it. If you rely on specific raw materials that are only accessible via a specific location, then you’re limited to what options you can do with that particular variable. I think that that’s a key underlying theme is that, for each of these variables, you have many different ways that you can address them and tackle them.
To the example that you provided about the supplier and potentially some performance or quality issues from the supplier. That’s a variable. The way that you can affect the variable is, you can get a new supplier. You could just say, “You’re not performing, I’m done. I’m onto the next one.” Or like you said, you could take the time to say, “This is what we’re noticing. We want to work with you so that you are able to provide exactly what we need, because that’s a win-win for both of us. That keeps us as a customer for you. That gets us the material that we need.”
I love, Dan, that you’re really highlighting this idea of, there’s different paths you can take to tackle each individual variable. Part of it is experience. Part of it is creativity. Always keeping in mind what is that end goal as that north star for, what are we trying to do and what’s really going to be the best way to do it?
Dan: Can I add one more or a couple more that just came to my mind as you were talking? Another one that probably a lot of people don’t think about is the political environment of the location where the supplier is at. Just picture this. If there’s anyone that’s purchasing raw materials or components from Eastern Europe, that’s going to be disruptive. Nothing to do with COVID, nothing to do with inflation. It’s just the political environment.
Now there’s a conflict happening. Infrastructure, of course, being factories are probably going to be depleted and they’re not going to be able to supply. There you have it. Elevating things at a higher level, I would say supply chain it’s a lot of moving parts. There’s so many things that can disrupt your game. I remember in having roles from supply chain, it was like, you had to be alert, you had to be paying attention at all times.
It could be things like political environment, it could be things like weather. There was a earthquake, there was a tornado, there was something, a tsunami that disrupted this, the ability of this location to be able to ship, and you have to react. If that becomes a recurring pattern, now you have to make an adjustment. It’s a matter of awareness and taking action on those things.
Josh: I love that you brought that up. The political side cannot be overlooked because that impacts a variety of different things. Everything from, is there an active conflict going on in the region that’s going to prevent any activity in there from the supply chain perspective. There’s also, even as basic as, how are tariffs going to impact what we’re trying to do? I love that you called that. There’s additional variables. It’s almost like you have to have strategic intelligence in order to successfully manage your supply chain. That’s such a key point.
That’s also what makes me excited for some of the technologies that are emerging. All of these different variables can essentially become data points. With enough data gathered over time in employing the use of machine learning and artificial intelligence, you can start to group together, when this event occurs, these are typically the outcomes on our production. With that heads up, then you can start to say, “What do we need to prioritize so that we can minimize the impact that it has to us?” I think those were great specific items to bring up with regard to supply chain.
Let’s talk about inflation. You had this line. I wrote it down because I was like, “That’s such a good way to put it.” Cut into inflation by being more efficient. You can’t control the macroeconomic factor that is inflation, but what you can control is your cost. Can you make the same product for cheaper by getting more efficient, by effectively utilizing your capacity, by really tapping into your labor? I think that was such a great example. When you think about opportunities for efficiency in your work, have you encountered common areas where if people were to prioritize or just look at, they could probably find some pretty significant efficiency savings?
Dan: Sure. I’ll get this one another way because the way things are, there’s probably not much that can be done or we have limitations. One, it’s excess inventory, and that’s one thing we try to open up or free up that working capital, which of course, it’s a breadth of fresh air for manufacturers. What we’re finding now is that with all these supply chain disruptions, whenever you can, you have to go get that inventory, otherwise, you don’t know if you’re going to be able to get that inventory.
I’ve seen clients where a supplier just says, “We’re not going to be able to supply your POs or fulfill your POs,” just like that. Now that makes that buyer not trust the supplier base and stock up on raw materials or components to be able to fulfill their orders. Some of the other ones that are highly relevant, things like internal defects and having good robust processes, reliable processes. Just about every client that we visit, manufacturer, has opportunity to improve their quality.
That’s something that you can absolutely control. Other than it being some engineering design problem or some raw material related. everything that’s generated internally, you should be able to maximize that because it hits you twofold. One, if you have to, let’s say, rework it or repair it, now you’re– incurring, is the word I was looking for, in additional labor. Then if you scrap it, you’ve incurred that labor, but you’ve also thrown away material, so you’re hitting yourself twice on that.
That’s one way to gain efficiency. Another way that is very, very typical is product flow. I always tell clients, if your product has to travel an extra a thousand feet, are you getting more money for it within your factory? Of course, the answer is no. You want to have the least amount of touches, the least amount of travel distance and the least amount of unnecessary work done to that product so that it gets out the door as fast as possible so that you can start generating revenue.
Josh: I love that you called out the current– I wouldn’t say conflict, but there’s the perspective on just-in-time manufacturing versus just-in-case. That really focuses on that idea of like, what are your inventory levels? For so long, it’s been just in time is the ideal way to do that. Well, with these complications with the supply chain, there is a bit of a swing back the other way, the just-in-case manufacturing side of things having that inventory just in case you need it. Dan, from your perspective, do you think that we’ll get back to a focus on just in time? Do you think there will always be an argument to be made for just in case? What are your thoughts on inventory?
Dan: I think it’s all a function of the reliability of your supply chain. Right now, there’s a lot of risk. The way to mitigate risk is stock up on inventory. That way I have a longer runway before I actually have to use that inventory that I’m waiting by the minute for you to ship. Until that variable stabilizes itself, we don’t know what the new normal is going to be.
That’s what’s going to drive everything. The flaw of the just in time system is that everybody has to provide what the next party needs exactly when they need it, in good condition, quality. Everything has to go well. As soon as one of the rings breaks in the chain, everybody has to go get more inventory to protect themselves because they want to get the sales. It’s a function of that.
To be honest with you, I would think that it would come down or their reliability would come up and the risk will come down and that’s going to drive less inventory, because these inflated supply chains mean that these manufacturers have to shell out all this extra money and have all that working capital out there. Think about it this way as well, depending on your type of product, there’s other factors that you have to consider, and these are probably the toughest ones.
When you have things like obsolescence or property damage or reduced space or lack of space, now you have to incur additional storage costs, and it just puts a lot of stress in manufacturers. I don’t know that there’s anyone that will know it. It’ll be a function of the reliability of supply chains. As those get more reliable and less risky, that inventory will come down.
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In the future, I anticipate that we will eventually get to a point where that reliability is there and it’s been optimized to such a point where just in time is the most reliable way, but as we see, we are not there yet. That’s the ideal vision that I have in my head. We all know that we do not live in an ideal world. You mentioned defects like tackling quality. In my experience in Parsable working with a lot of the the day to day activities on the frontline, what are operators doing?
I found that one of the most common drivers of some of the problems that we’ve seen is what a person does or does not do. I bring that up because we’ve talked so much about variables, and what I’ve found in my experience is that what your people are doing is one of the biggest variables in your workflows and processes leading to the results that you’re having. The more that you can identify what are those variables, standardize the way of doing things. You mentioned making sure you have robust process for quality. It’s not just enough to have that process, you have to have that enforcement.
What are those tools that are making sure that not only I’ve performed my center lining correctly. I’ve set it to everything that it needs to per my process and procedure. Is somebody then taking a look at that, verifying that, checking what impact that particular setting has had on the product itself, et cetera? Just that focus on one of your biggest variables being, what are the people actually doing? That can lead to quite a few insights.
Now, we talked a little bit about workforce disruption and I love how you address this upfront. Compensation is typically what comes up first. In conversations that I’ve had with manufacturing leaders as well as some consulting groups and industry experts, compensation is by no means the only factor. In fact, sometimes it’s not even the number one factor. That varies based off of demographic and location.
That idea of a work environment. That idea of– Really, the way that I’m going to summarize, Dan, what you were saying is the culture of that working environment, because you described, does it feel hostile? Does it feel like you can’t make mistakes? Does it feel like people aren’t listening to you? That’s all reflective of the culture. What we’ve seen is that the more you focus on culture, the more you focus on making your place of work a place where people want to work, make it easy for them to work for you.That has a huge impact on retention.
In fact, it has an impact on recruiting because now you can start to tap into referral recruiting where people say, “Hey, look, you’re my friend. This is the best job I’ve ever had for these reasons. I think you’d like it. Why don’t you come talk to us?” There’s such a big thing to be said about the variable that is your work environment. I love how you summed it all up with leadership. Can leadership evaluate how are they contributing to these factors?
I think that that’s critical because the second you say, “Nobody wants to work anymore,” you alleviate yourself from responsibility, as opposed to having the ownership of, “Why don’t people want to work for us?” That’s a totally different way of approaching the scenario. One, you can do something about, the other is more tied towards that macroeconomic trend.
I think these were great points for you to raise up. I really appreciate you taking us through those, Dan. Now, look, we’ve talked a little bit about continuous improvement. Continuous improvement is not a new concept by any means, but there’s reasons why even though you might have a continuous improvement methodology implemented, there’s a reason why that might not work for you or it might not be working for you. I’d love for you, Dan, to talk to us about what are some of the reasons why a continuous improvement methodology might fail to help a manufacturer.
Dan: There are so many reasons. Like any change initiative, it’s all about leadership. You could have the best technical person to help you. If the leaders at the highest level don’t buy in, they don’t play their role, they don’t support, they don’t remove obstacles, blockers, even if those mean people within the company or all their leaders at the higher levels, it’s doomed to fail. We have an article actually up on the website that we talk about 10 reasons why. In the case of the article, it says 10 reasons why Lean implementations fail. Part of it is also a lack of understanding.
Some people see it, “This is going to be a project and we will get through this in six months to a year, and then it’s implemented and done, and we can just move away from this.” That’s not what it is. That’s not the intent of it. When I say these things, I’m thinking about Lean. People, they need to learn to understand it for what it is. A management system. A management system, it’s the way you run your business.
It has aspects throughout all the business disciplines, from strategy to operations, to sales, and engineering and all the other sup support functions. It’s not something that you’re going to implement and move on. No. We start it, we learned the principles, we start applying, we start making improvements, but then you’re left off with new methods and that becomes just a new way that you’re going to do it going forward. That’s where people miss it. There’s also just not understanding the validity of it.
As long as these principles and methods have been around, I find that there’s still a significant amount of the manufacturing community that are not intimate with these practices. The larger the companies having the resources to be exposed, and they’re a little bit more, if you will, in tune. Even at those sizes, some companies just don’t have a good grasp. More importantly, having the leaders, even if you have the understanding, if you have leaders that can’t rally a team, more than likely, you have a very poor chance of succeeding at implementing these and getting the benefits.
Josh: What does that lead to in your experience?
Dan: It leads to frustration from your workforce. It leads to false starts. It leads to loss of trust, credibility and respect from your workforce. That’s very powerful because they don’t trust you, now, anything you say going forward, they’re going to be skittish, they’re going to be hesitant. They won’t respect you because they’re going to question your judgment and you’d lose credibility, meaning they’re thinking you don’t know what you’re talking about.
I want to emphasize that because any time that we engage with a company, one of the first things I tell them is, you have to be all in. You have to be 100% committed. I need you to think about the person that you respect the most. If that person becomes a blocker, you have to put every effort to get them to come with us or be willing to either shift them to a different role and possibly even exiting the company. That’s a big commitment.
Josh: It’s huge.
Dan: Otherwise you’ll fail.
Josh: It ties into some of those factors that we’re experiencing. Worker retention, workforce retention has been a problem. A valid question is, how has your implementation of your management system, whatever that might be, not just continuous improvement, but that management system played in impacting? Like you said, Lean is across all aspects of an organization, not a specific process, not just a specific group of individuals who are focusing on it.
The entire business has to embrace that perspective. Otherwise, with these gaps, it leads to some of the faults that you’re calling out, which is people are going to get frustrated. You’re going to lose the faith of the people. You lose that. You’re going to lose the buy-in, the adoption. That means people aren’t going to be doing it. It’s going to lead to that worker retention issue that we’re having.
Dan: I’ll have one more thing. I think it also boils down to the leadership behaviors of your leaders. Are they challenging, engaging, coaching, and creating that environment? Because it’s all driven by your leaders. If your leaders adopt or display these negative behaviors, that’s going to drive your people to disengage or eventually leave.
I think that’s another gap that’s very common out in manufacturing where we look at two things. We look at operations management, which are the technical tools for Lean, continuous improvement. Then we also have leadership skills. Are you able to keep your people engaged and motivated? Are you identifying your people, matching them to the right job, and carving a path for them to grow? Are you delegating? These are all behaviors that if they’re lacking, that’s just going to prompt that turnover more quickly.
Josh: When you think about the impact that it has, really what we’re talking about is an inability to meet production demands. That’s the goal, is we want to deliver the products to the consumers at the rate of their demand, so in order to do that, we have to produce at a very specific rate. There’s common reasons why manufacturers may struggle to meet production demand. Dan, I’d love if you could talk us through, in your experience, what are some of the most common reasons why someone or a manufacturing operation might be struggling to meet production demand?
Dan: There’s various, but I would say, as I mentioned earlier, things like product flow. The product not flowing in an efficient manner. There’s a tool we use, we call it spaghetti diagram where we trace the path of the product. We look at all the places it goes and how much travel and how much handling there is. A lot of times that adds labor cost, risk of damage, risk of quality defects because the more touches, the more opportunities they are. The second one I would say is generating internal defects for quality mistakes or just workmanship.
Then the third one, and this is a big one because this one, it just perpetuates the cycle. That is the firefighting that happens every day on manufacturers. I’ve heard people refer to this the hero syndrome or the addiction to the heroic recovery, where there’s leaders, I am telling you, that feel that their job, their existence is justified by putting out fires. They feel they need to leave their workforce alone, just watch that things are going well, and when there’s a fire, step in and fix it.
What happens with that is that you get that order out, that instance gets resolved, but the next one, you’re not preventing it. What happens is that you continue to experience those issues and they continue to just eat at your margins, create risk for client erosion. It’s just this cycle of sub-power performance that it just keeps happening. Underneath the fires, the fires come in all shapes and sizes. It could be mistakes, it could be defects, it could be mislabeling, it could be shipping to the wrong location. The list goes on. If you don’t address the root cause behind the issue, then the issue will continue to just affect your operation day in and day out.
Josh: That’s the one that really resonates with us here at Conquering Chaos because that was the inspiration for the title, Conquering Chaos. It’s chaotic when you’re fighting fires all the time. We want to help people get to the root cause and overcome it and implement sustainable solutions so that that fire doesn’t pop back up. That’s certainly something that really resonates. I love that you called out hero syndrome.
I actually first heard it interviewing a guest on this show where we talked about that idea of the culture typically celebrates the person that can figure out this complex issue and not the day-to-day heroes that are helping to prevent the issue from ever occurring. The person that’s celebrated is that person that you called in because they know how to use this particular equipment. They’ve done so for 15-plus years. They’re going to help us out. When really the goal should be everyone’s a hero because they’re all working together, and it’s not leading to these situations where you got to fight the fires.
I think that’s such a great concept to bring up. We talked a little bit about defects before. Let’s talk a little bit about the product flow. You said one of the things that you recommend and one of the activities that you go through with the manufacturers that you work with is a spaghetti diagram. Taking a look at where the product is going and really helping them optimize for labor costs and reducing risk by providing a more efficient product flow. From your perspective, Dan, are there any rules or concepts, or best practices for product flow that people should keep in mind?
Dan: Something that’s very common on machine shops is the light all machines are placed together. There’s the light department, then there’s the drill department, there’s the saw department, and there’s the department, to think of something. The principle I can give your listeners is to make sure that when you build a layout, and this happens as companies expand, that expansion a lot of times comes rapid fire, and you don’t have time to really think this through.
You want to create your production in the same manner as the product is processed or basically built, as opposed to having separate operations in different places or large distances. You want to maintain that flow. I know there’s limitations. I know there are businesses that it’s sometimes not as conducive to doing this, but as best you can, if you can build things co-located in the flow or resembling the flow of the product in that sequence, that’s going to serve you much, much better than doing that.
Also recognizing that there’s some pieces of equipment. We call these monuments. These are those large structures like cranes, sometimes furnaces, where you have to heat treat product, pain boots can also fall in that category. Again, these large pieces of equipment, if you can get away from those, if you can find a smaller version of those, that would be even ideal. Monuments are a constraint to product flow, because now you’re stuck with this mammoth piece of equipment and you have to build your operation all around it.
Josh: Such a good point. I love that concept of the monument. There’s always going to be a bottleneck. Is it there by design? This is the most optimized. No matter what, this is always going to be the bottleneck, or is there something that can be done to address it? To your point, can the use of something that’s smaller, more flexible help alleviate some of the demand that’s placed on a monument machine or help improve the product flow thus impacting production?
I think that’s such an interesting point to bring up. Let’s talk about strategies for moving forward. I hear a lot about Lean. In fact, you mentioned that article about 10 reasons your Lean implementation has gone wrong or 10 reasons why Lean implementations fail. There’s a lot of different methodologies, management systems out there, Six Sigma, TPM, et cetera. First, I got to ask you, do you have a preferred management system that you will argue till you’re blue in the face is the best?
Dan: Oh, that’s a good question. I would say, being an industrial engineer and being all about systems and operations, I think my preference, it’s typically Lean because it’s very practical. It’s not overly complicated, and it can very quickly have an impact. Now, in our practice, and we work with clients, we’re not– How can I say it? I don’t like that word that people typically use, but just Lean Zealot, I’m going to say. We’re very flexible. We’re not purist. It has to be this way. We have a saying, our tagline it says, “Effective solutions. Lasting results.”
Effective solutions, I say that they come from the collaboration between the client and us. We bring frameworks, experience, benchmarking and observations, and our own ideas. We combine that with the client knowledge of their industry and their product. That collaboration brings the solution. Let me finish, solutions. Lasting results come from the client adopting a new way of behaving so that they have the ownership and they can carry it forward when we’re no longer engaged.
Equally, we’re adaptable when it comes to management system. We actually interject things that have nothing to do with Lean to help the client actually leverage their execution to the best of their abilities. I feel that Lean is heavily focused on the technical aspects of things, and it has some principles that actually touch on the soft skills of leaders.
What we’ve done in our approach that’s unique to our industry, is we’ve combined those things. The people side, the culture side. We throw around the word culture as this fuzzy ominous thing. We actually make it very tangible to complement the improve improvements that you can make by implementing Lean. Lean is our preferred. We absolutely understand there are others, but we feel Lean is the one you could probably have the most impact in the least amount of time.
Josh: From your perspective, Dan, what would you say is more important? Is it more important to pick and commit to a specific methodology, or is it more important to do what you said, which is look for what works, take that, adapt it and use it to the benefit of your organization?
Dan: You may not like my answer, but I think it’s basically, what is it you’re after? What do you want to accomplish? Based upon that, use whatever principle, concept or tool that’s going to get you there. As I mentioned earlier, I’m not Lean Zealot or consider myself it has to be Lean or it won’t work. I’ve worked with clients that they’ve used the Six Sigma methodology to do analysis. We have to be adaptable to what’s in front of us. If we only subscribe to Hammers, then everything’s going to be a nail.
I refuse to submit myself to that. In my mind, there’s strategy, there’s statistical analysis that is going to help us. Sometimes it’s maintenance practices. There’s not one way. To me, you’re trying to get your business to grow profitably. What are the challenges that are behind that? Then what’s the best way to go about tackling those? Yes, Lean is one of the tools. The principles that Lean brings to the table are the ones we use.
A lot of those principles are shared by a lot of these methodologies that you see out there. In my mind, it’s all about getting the results you’re after. That’s what I’m subscribing to. How do we get from lower margins to larger margins, shorter lead times, better quality, customer satisfaction, recurring business, expansion, growth? That’s what I’m looking for. The desired end result, basically.
Josh: I think that makes absolute sense. If I were to summarize, it’s find the tool that’s going to help you get the job done. That could be picking and committing to a very specific methodology. That could be pulling and borrowing from a ton of different methodologies, because to your point, a lot of the principles are the same. Some of the details may vary. Some of the required tasks or activities may vary, but at the end of the day, find what’s going to work best for your organization.
I think that’s true. Not just in manufacturing, that’s true in life. In various aspects, whether you are a cook and you’ve got a specific style of cooking that you want to adhere to, and you’re only cooking that type of food, or if you want to start to explore some fusion, taking elements of what works for a different type of food and bringing it in. Whatever’s going to work for you, whatever’s going to satisfy that end goal and result. I think that that’s such great advice of you really have to evaluate it. It could be this, could be that.
Dan: Let me give you an example just for context for people. As we were talking, I was thinking about, I was recently working with a chemicals company. They were evaluating their variability, what are the factors that actually contribute to the run time of this certain piece of equipment? We looked at the shifts, we looked at the piece of equipment, the specific piece of equipment, the operator, the chemicals that were used. They have different types of formulations.
To be able to do that, you have to use tools like the sign of experiments, which basically analyze the variables and tell you what’s the correct setting and which ones really matter. That gives you that level of consistency. Then you move over to a different client where firefighting, it’s pervasive. They’re running like headless chicken, as people say. You have to. In that case, what you do is you put measurements, you standardize, you give them a system for them to tackle issues, you teach them problem solving.
In those two examples, very different applications, one is Six Sigma, the other one’s Lean. If you look at Six Sigma, it’s advanced statistical analysis. I don’t know that it’s even practical to have your entire workforce to be advanced and– Or proficient, is the word I’m looking for, proficient in advanced statistical analysis. That specific case, it required that.
You can probably expect most of your workforce to be basic problem solvers, good monitors of performance, coaches, basic problem solving, and those kinds of things, and that can be widespread. That’s a Lean concept. Again, to reinforce. Hopefully, that example explains my thinking, that it depends on the situation you’re in and we have to be flexible and adaptable to use the right approach to tackle our problems knowing what’s the end in mind, profitable growth and whatever the challenge that’s in front of us.
Josh: Great example. Dan, how can our listeners continue the conversation with you?
Dan: I meant to mention this at the beginning of the interview, but I wanted to leave your listeners with, I guess, a tool to maybe think, reflect on their current performance and evaluate, find ways to get better. It’s a performance assessment that’s proprietary. We have it on our website. I’ll leave you the link if it be possible to link it in the episode page for listeners to go visit it. Basically, you answer 10 questions for different metrics and it gives you feedback and you can see the benchmarks and see if, where do you compare? Are you good, excellent or maybe fair or maybe you really need to look at your performance and improve.
In terms of getting in touch or learning more about us, they can visit us at alphanovaconsulting.com. If you search, we’re very active on LinkedIn, Dan Burgos or Alphanova Consulting. You can either follow us, connect with us. We’re very happy to connect. We’re always pushing contact out content out there that’s educational, that’s engaging, hopefully, and helpful for your listeners.
Josh: Awesome. We’ll make sure to include that assessment in the show notes so that it’s quick and easy to access for our listeners. Dan, thank you so much for joining us today.
Dan: Thanks so much for having me. It’s been a pleasure and enjoyed the conversation.Listen to learn about the 4 things that may be preventing you from meeting production demand